Here's Why Google Has to Pay a $5 Billion Android Antitrust Fine

Google slapped with huge fine for illegal business tricks

Google will be fined around 4.3 billion euros ($5 billion) by the European Union over Android apps on Wednesday, setting a new record for antitrust penalties, according to a person familiar with the EU decision.

Margrethe Vestager, the European Union's competition regulator, announced the fine after an investigation into Google's contracts with smartphone manufacturers and telecoms operators.

The penalty is almost double the previous record of 2.4 billion euros which the USA tech company was ordered to pay past year over its online shopping search service. Crucially, by default all Android phones use Google as the default search engine and Google Chrome as the default web browser.

'These practices have denied rivals the chance to innovate and compete on the merits.

Google has argued that its practices have not reduced consumer choice.

A spokeswoman for Google did not immediately respond to an email seeking comment.

About 80% of smart mobile devices in Europe and worldwide run on Android, whose original developer Google bought in 2005, the commission said.

Google has a long history of pushing back and it is likely to drag out its appeal against the fine. This is the largest fine imposed by a regulator against a single firm.

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In a statement at the time of the verdict, commissioner Margrethe Vestager said: 'Google has come up with many innovative products and services that have made a difference to our lives.

Google's actions reduce the incentives for manufacturers to install and for users to seek out competing apps, it said.

John Simpson, the director of Consumer Watchdog, said: "The US Federal Trade Commission or Department of Justice should also act to end Google's monopolistic abuses, instead of letting the Europeans be the only cop on the antitrust beat".

During the investigation, device manufacturers told the Commission that the Google Play Store is a "must-have" app, which consumers expect to have pre-installed, especially since they can not lawfully install it themselves.

Two European sources told AFP the fine would be "several billion euros" without giving further details. Manufacturers looking to provide buyers with access to the Google Play Store also had to give other Google apps prime placement on the phone, including Google Search. "The decision does not prevent Google from putting in place a reasonable, fair and objective system to ensure the correct functioning of Android devices using Google proprietary apps and services, without however affecting device manufacturers' freedom to produce devices based on Android forks".

"Today's decision rejects the business model that supports Android, which has created more choice for everyone, not less".

Google has built a massive business of banner and videos ads, thanks largely to its central role on Android devices.

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